Ever heard of crowdfunding or came across this term somewhere, but
at the same time you are unsure of what EXACTLY is it? Crowdfunding
is a term that should be known throughout the startup and
entrepreneur industry. Below is what you will find if you were to
hit up the Dictionary under Google’s search results.
Source: Google – Dictionary
If you were to decipher and breakdown the words separately into
(Crowd + Funding), it is pretty self-explanatory.
“Crowd – A
big group of people from the public
+
Funding – Money
provided to fulfill a
purpose. ”
There has been a noticeable pattern seen in Singaporeans or those
who reside in Singapore to adopt anything that is viral, trendy, or
successful online, or offline. There is no exception when it comes
to the entrepreneur industry where the term “Crowdfunding” is one
of the many avenues where startups are able to source and raise
money for their ventures, projects, products or a service.
But not many are sure of what entails crowdfunding, the risks,
rewards, repayments, what to expect and what not based on the
categories of the respective crowdfunding types. Today, be it
looking to fund a project or an idea, or even get funded for a
product, you have to know how to differentiate the several kinds of
crowdfunding if it is not being explained or broken down in the
crowdfunding campaigns. Fundraisers should also take note the
different types of crowdfunding in order to entice and increase the
success rate of your crowdfunding campaign.
Donation Crowdfunding
“Treat
donation crowdfunding like any other typical charity function,
where the amount that is being raised does not entail any form of
risks or returns. People who fund this kind of project, movement,
or an idea are passionate supporters who has strong
beliefs.”
Reward Crowdfunding
“Reward
crowdfunding resembles donation crowdfunding, where money is being
raised for an advertised project or product that they truly believe
in. But in return, the fundraisers will reward those who funded
their project in a form of a reward or something that is
non-monetary.”
Debt Crowdfunding
“In
this form of crowdfunding, it involves a formal business
transaction where there could be one or more investor/lender
loaning out money to a startup/business. In return, the business
repays the interest which was previously mutually agreed between
both parties through the crowdfunding
platform.”
Equity Crowdfunding
“Simply
by briefly reading off the title, an equity crowdfunding is where
investors would buy into the company, having certain amount of
shares/equity of a company, typically having the title of a
shareholder along with the rewards any shareholder would expect;
dividend payouts and capital appreciation if the company/product
were to be successful.”
In short, these are the current types of crowdfunding that startups or
companies use to raise funds under a projected timeline. With a
keen eyesight and some luck, you might be funding for the next
Facebook, Grab, or products such as a smart charging cable where
almost everyone with a smartphone would have these days.
Asking yourself which role are you in is also important, because
you would most probably be categorized under one of the
following:
An Investor
“Someone
who contributes money, expecting returns in the form of equity,
dividends, shares or interests.”
A Firm Believer (Contributor)
“Someone
who truly believes that this product/movement/project would be the
next big thing, or it could potentially solve a pressing issue that
you can relate to, having a massive belief in it without expecting
anything in return, just seeing the product/project come to
fruition would be your goal. ”
A Fundraiser/Crowdfunder
“A
collective group of people or a company coming together, sometimes
it may also be just single individual who needs to raise money for
a purpose, a project, a movement, a
product. ”
Every individual, startup/company or even contributor has something
they want to see at the end of the tunnel, be it a prototype
product that will eventually be available everywhere, being part of
a movement to advocate awareness of something important, or being a
shareholder in the next Grab/Airbnb.
Numerous question marks would have already begin surfacing by now
if you are one of the following above. For instance, you have a
novel product or a really unique idea that requires
some fund to be raised, or as much money as you can
get your hands on under a short period of time. The next question
is, would it be easy to source for the right audience or the right
group of people to hear you out, let alone worry how big this
particular group of people is? Where should you start? Who should
you approach?
Here are a couple of popular sites that you are able to view the
current projects that are available for funding, or start a
campaign to raise your own funds today!
FundingSocieties.com
Funding Societies is Southeast Asia’s
leading peer-to-peer financing platform, and the first to crowdfund
more than SGD 130 million, the largest crowdfunded SME loan amount
in the region in about 2.5 years.
With Funding Societies, one can invest with an amount as low as
$50. Credit-worthy SMEs that require funds may secure business
loans from $5,000 up to $1.5 million.
In 2015, Funding Societies became the first debt
crowdfunding platform in Singapore to engage an independent trustee
to manage the investor funds, unlike the practice adopted at that
point in time by most platforms. This was done even before any
regulatory mandate. It was an expensive but necessary decision to
ensure that investors’ monies are handled professionally and
safely.
FundedHere.com
Source: fundedhere.com
GoGetFunding.com
Source: gogetfunding.com
Indiegogo.com
Source: Indiegogo.com
Kickstarter.com
Source: Kickstarter.com
It is always good to do some prior research and read up
on crowdfunding, or even the websites that you were
being referred to, or interested in before committing into any of
these crowdfunding websites especially when money is involved.
Recently, there has been an increase in crowdfunding platforms who
want a piece of the pie. Hence, the Monetary Authority of Singapore (MAS) will
be stepping in with to facilitate this whole process, having say in
areas where money is involved, so that donors or even investors
would have the ease of mind when contributing to an idea or
product. Always be sure to keep a look out when making your
donation, or starting a crowdfunding campaign. . Ensuring that the
company is being licensed by the MAS is important because we all
want to know that our money is safely being funded for the intended
purpose rather than a case of fraud or scam with fake crowdfunding
campaigns ongoing.
Crowdfunding sites such as CoAssets have their License Number
displayed at the bottom of their website else it can be found under
their About Us. It is recommended to only use a platform that is
being licensed to prevent any misuse of funds. If the
company/platform does not display their license number, be sure to
ask for it and counter check against
If you need more information or official updates from the MAS
regarding crowdfunding, do always check into the MAS media releases or simply search up the
name of the company under “Capital Markets” to see if they are
.
Zuu